Opening statements

Yes

Wolfgang Fengler

WOLFGANG FENGLER Lead Economist, World Bank, Nairobi

Wolfgang Fengler is the Lead Economist in the Nairobi office of the World Bank, where he covers Kenya, Rwanda and Eritrea. A native German, Wolfgang has been a staff member of the World Bank for over 13 years, during which time he has worked at its headquarters in Washington DC, as a Senior Economist in its Indonesia office, and currently in Kenya, which hosts the World Bank's largest office in Africa. He has published extensively on social and economic issues, and co-authored (with Homi Kharas) "Delivering Aid Differently". Since August 2011, he has co-hosted the "Economic for Everyone – Development Discourse …" column in the Saturday Nation. Prior to joining the World Bank, he set up Africa Consulting, LLC, and was a Fellow at the Research Institute for International Relations.

Lead Economist, World Bank, Nairobi

Africa is in a much better economic position today than it was at the turn of the century. Recent gains are only the first manifestations of profound, long-term transitions, which have the potential to accelerate Africa's development.

No

Rick Rowden

RICK ROWDEN Development consultant

Rick Rowden is a development consultant who has worked as an Inter-Regional Advisor for the United Nations Conference on Trade and Development (UNCTAD) in Geneva and as a senior policy analyst for the NGO ActionAid, and has travelled extensively in Africa. Previously he lectured in Global Studies at California State University, Monterey Bay and in Political Science at Golden Gate University in San Francisco. He is currently a doctoral candidate in Economic Studies and Planning at Jawaharlal Nehru University (JNU) in New Delhi.

Development consultant

While many African countries deserve credit for recent successes in building certain service industries and raising per capita incomes, Africa is not likely to become the next global economic powerhouse, akin to a new east Asia, any time soon.

The moderator's opening remarks

Mar 12th 2013 | Oliver August

OLIVER AUGUST Africa editor, The Economist

Oliver August is The Economist's Africa Editor. He previously covered the Middle East and continues to travel to the region. As a correspondent for The Times he wrote about America (1997–1999) and China (1999–2006). He is also the author of two books, "Inside the Red Mansion: On the Trail of China's Most Wanted Man" and "Along the Wall and Watchtower: A Journey down Germany's Divide".

Sub-Saharan Africa has made huge leaps in the last decade. Malaria deaths in some of the worst-affected countries have declined by 30% and HIV infections by up to 74%. Life expectancy across Africa has increased by about 10% and child mortality rates in most countries have been falling steeply. A booming economy has made a big difference. Real income per person has increased by more than 30%, whereas in the previous 20 years it shrank by nearly 10%. Africa is the world's fastest-growing continent just now. Over the next decade its GDP is expected to rise by an average of 6% a year, not least thanks to foreign direct investment, which has risen from $15 billion in 2002 to $37 billion in 2006 and $46 billion in 2012.

But Africa has seen booms before, only to crash-land. Violence is still common in some parts of the continent. Corruption has not gone away and in some cases has actually increased thanks to growing commodities revenues. Proper governance could take care of this but all too often it is missing. Too much hype surrounds the rise of Africa. Boosters proclaim an "African century" and talk of "the China of tomorrow" or "a new India". Sceptics retort that Africa has seen false dawns before. They fear that foreign investors will exploit locals and that the continent will be "not lifted but looted".

Over the next two weeks we'll be debating the question: "How real is the rise of Africa?" Proposing is Wolfgang Fengler, the lead economist in the Nairobi office of the World Bank, its largest on the continent. Opposing is Rick Rowden, a development consultant who has worked as an adviser for the United Nations Conference on Trade and Development (UNCTAD) in Geneva and as a senior policy analyst for ActionAid, an NGO.

During their debate they are likely to touch on the role that industry will play in Africa over the coming years, how population growth is going to affect development and what part new international partners like China, India and Brazil may be expected to take. The debate will focus on the future as much as on the present. That Africa has changed in the last decade is hard to dispute, but how durable is this change?

Employment and equality are likely to be the indicators that count most. For change in Africa to become permanent, many more residents would have to earn a decent income and wealth could no longer creamed off by elites to the extent that it is now. To find out how likely that is, let's turn to our experts.

The proposer’s opening remarks

Mar 12th 2013 | Wolfgang Fengler

WOLFGANG FENGLER Lead Economist, World Bank, Nairobi

Wolfgang Fengler is the Lead Economist in the Nairobi office of the World Bank, where he covers Kenya, Rwanda and Eritrea. A native German, Wolfgang has been a staff member of the World Bank for over 13 years, during which time he has worked at its headquarters in Washington DC, as a Senior Economist in its Indonesia office, and currently in Kenya, which hosts the World Bank's largest office in Africa. He has published extensively on social and economic issues, and co-authored (with Homi Kharas) "Delivering Aid Differently". Since August 2011, he has co-hosted the "Economic for Everyone – Development Discourse …" column in the Saturday Nation. Prior to joining the World Bank, he set up Africa Consulting, LLC, and was a Fellow at the Research Institute for International Relations.

After decades of Afro-pessimism the new buzz-word is "African renaissance". But is it really justified and are we being as naively optimistic today as we were excessively pessimistic yesterday? After all, more than 40% of Africans still live below the poverty line, many of their governments remain among the most corrupt in the world, and many deadly wars are fought on the "dark continent".

There are two basic reasons to be realistically optimistic. First, Africa is in a much better economic position today than it was at the turn of the century when many, including The Economist, wrote it off. Second, recent gains are only the first manifestations of profound, long-term transitions, which have the potential to accelerate Africa's development.

Since 2000, GDP growth rates have averaged and often exceeded 5% per year and this is not limited to a subset of—poorly governed—resource-rich states. Coastal (Senegal, Mozambique) and land-locked (Burkina Faso) countries, commodity exporters (Zambia, Nigeria) and importers (Ethiopia, Rwanda), low-income (Uganda) and middle income economies (Mauritius, Botswana) have all experienced high levels of growth.

This strong performance was not due to higher commodity prices alone. Most notably, Africa has achieved profound improvements in macroeconomic policy. It has weathered both the global financial crisis and the turbulent euro zone, while managing to maintain economic growth and macro-stability. By the yardstick of public debt, almost all African countries outperform EU nations: a twist of fate from the turn of the century, when most African countries were strapped with unsustainable debt.

Moreover, economic growth has translated into significant human development outcomes. Poverty rates are falling fast and key social indicators are improving even more rapidly. Between 1999 and 2012, Africa's poverty rate fell from 58% to 43%, about 1 percentage point per year. Despite war and infectious diseases, Africans are now living longer than ever before—55 years on average, which is seven years more than a decade ago. This trend is set to continue. Ten years from now, life expectancy is expected to reach 60 years, thanks to sharp anticipated reductions in child mortality. In Kenya, child mortality has declined by 38% since 2000, which is faster than the target under the Millennium Development Goals (MDGs).

These positive trends are underpinned by three deep tectonic shifts of which today's gains are only an early manifestation: demography, geography and technology.

First, Africa will be the new demographic powerhouse of the world. Half of the world's future population growth will be driven by Africa, not because of higher fertility (which is declining) but because of longer life expectancy. This is creating a demographic opportunity because Africa's adult population (its future workforce) is rising rapidly: it was 460 million in 2010 and is expected to be almost 800 million by 2030. By contrast, children and elderly (dependents) will be relatively fewer. A similar demographic transition explains roughly a third of East Asia's growth performance over the last three decades.

Second, Africa is experiencing a geographic transition. Most African cities are still small but growing rapidly. Today, 40% of Africans live in cities, and this will increase to more than 50% by 2030 as Africa catches up with the rest of the world. Across the world, urbanisation is associated with better economic prospects because it creates more attractive markets and operating environments for businesses. Cities also provide good services, which is why urban Africans enjoy better livelihoods than their rural compatriots.

Third, technology combined with education is reshaping Africa's development outlook. Today, Africa has more phones than adults because telecommunication is affordable for almost everyone. Thanks to cell-phones—which have morphed into multi-purpose devices—Africans can more easily participate in social and political life, especially if they reside in a remote village. The social benefits of mobile connectivity are compounded by an expansion in education. Primary education is no longer a luxury (primary enrolment is almost universal) and the continent will soon be in a position to reap an "education dividend" thanks to the rapid expansion of secondary education. Companies such as IBM, Nokia and Google are criss-crossing the continent in search of business opportunities and human talent.

Mission accomplished? Not so fast. Africa remains the world's greatest development challenge. By any international standard, Africa's levels of incomes and social conditions remain extremely difficult. The majority of Africans are either poor or vulnerable to shocks. There are also significant variations across countries and sectors. Countries like Central African Republic, Madagascar, Gabon and Zimbabwe are suffering from conflict, poor governance, deep inequality, and often a combination of these ills. But these countries are now the exception not the norm.

Policies have not improved universally, which also explains why Africa is not yet experiencing an industrial revolution. However, the good news is that African governments don't need to carry out Herculean tasks of reforming their countries wholesale. In order to attain current growth rates, Africa only needed to get a few—albeit very important—things right, in particular, macroeconomic policies and political stability.

Going forward the challenge will be not only to maintain that discipline but also to harness the huge potential created by a young population and the technological revolution that already enables agriculture and informal firms to grow.

This is why Africa is rising. It may not follow the same paths as other regions and some countries may still be left behind. But ten years from now, average incomes will be higher than today, poverty will be lower and Africans will continue to live longer.

The opposition’s opening remarks

Mar 12th 2013 | Rick Rowden

RICK ROWDEN Development consultant

Rick Rowden is a development consultant who has worked as an Inter-Regional Advisor for the United Nations Conference on Trade and Development (UNCTAD) in Geneva and as a senior policy analyst for the NGO ActionAid, and has travelled extensively in Africa. Previously he lectured in Global Studies at California State University, Monterey Bay and in Political Science at Golden Gate University in San Francisco. He is currently a doctoral candidate in Economic Studies and Planning at Jawaharlal Nehru University (JNU) in New Delhi.

While many African countries deserve credit for recent successes in building certain service industries and raising per capita incomes, the popular "Africa Rising" narrative is overplayed. Africa is not likely to become the next global economic powerhouse, akin to a new east Asia, any time soon.

While proponents of the narrative, such as The Economist and Time Magazine, have cited such indicators as the increased use of mobile phones, high GDP growth rates, the numbers of African billionaires and kilometres of new roadways being built on the continent, these indicators fall far short of telling us how well Africa is actually developing or not.

I believe it is far more useful to use the conventional definition of development that has prevailed from 1485, when Henry VII set England on course for a future in manufacturing, all the way through the industrialisation of Europe, America, Japan and the tigers of east Asia, including China: the transition of economies based on primary agriculture and extractive industries to economies focused on manufacturing and value-added services.

This conventional understanding of development has been wholly displaced in recent decades by a discourse that highlights instead the notion of "poverty reduction" and achieving the Millennium Development Goals (MDGs). While reducing poverty and achieving the MDGs are worthwhile, the inordinate focus on them has unfortunately displaced industrialisation as the common measure of successful development. Aid donors have aided and abetted this conceptual displacement, which I fear has created a lot of confusion regarding how we currently assess successful development. From listening to the donors, one could easily think that simply achieving higher GDP growth, increased trade and/or reductions in poverty is the same thing as achieving development. But it is not, at least not by this historical and conventional definition of development.

For example, if an African country like Malawi achieves higher GDP growth rates and increased trade volumes, this does not mean manufacturing and services as a percentage of GDP have increased over time. Malawi may have earned higher export earnings for tea, tobacco and coffee on world markets and increased its volume of exports, but it is still largely a primary agricultural economy with little movement towards the increased manufacturing or labour-intensive job creation that are needed for Africa to really "rise".

If instead, we apply the traditional definition of development to Africa today, we see that in fact Africa is not developing. Indeed, it is far from being another economic powerhouse like east Asia. For example, a 2011 joint study by the United Nations Conference on Trade and Development and the United Nations Industrial Development Organisation that explored this question found, despite some improvements in a few countries, that the bulk of African countries are either stagnating or moving backwards when it comes to industrialisation. The study found that the share of manufacturing value added (MVA) in Africa's GDP fell from 12.8% in 2000 to 10.5% in 2008. There has also been a decline in the importance of manufacturing in Africa's exports, with the share of manufactures in Africa's total exports having fallen from 43% in 2000 to 39% in 2008. In terms of manufacturing growth, while most have stagnated, 23 African countries had negative MVA per capita growth during the period 1990–2010, and only five countries achieved an MVA per capita growth above 4%.

The report also found that Africa remains marginal in the global manufacturing trade. Its share of global MVA has actually fallen from an already paltry 1.2% in 2000 to 1.1% in 2008. In terms of exports, Africa's share of global manufacturing exports rose from 1% in 2000 to only 1.3% in 2008. Africa is also losing ground in labour-intensive manufacturing: Its share of low-technology manufacturing activities in MVA fell from 23% in 2000 to 20% in 2008, and the share of low-technology manufacturing exports in Africa's total manufacturing exports dropped from 25% in 2000 to 18% in 2008.

Such unflattering statistics are, of course, completely at odds with the "Africa rising" narrative.

One reason for this is likely to be the disrepute that has disrepute that has unfairly befallen the use of industrial policies as the free markets ethos has come into ascendancy in recent decades. However, today Africa should be encouraged to use industrial policies—even to the extent they violate free market precepts—for much the same reasons that such policies were used by Henry VII and all of today's industrialised countries when they were first industrialising. To this end, donor agencies, free trade agreements and bilateral investment treaties should refrain from denigrating the use of industrial policies so that Africa has the policy space it needs to truly rise.